Sportscasters might see 10-15% drop in subs rev due to proposed amendments in Sports Act

MUMBAI: The sports broadcasters might take a 10-15% hit on their subscription revenue if the ministry of information and broadcasting (MIB) goes ahead with its proposal to amend the Sports Act 2007 to allow the broadcast of events of national importance on private direct to home (DTH) and cable TV platforms.

Currently, the sporting events of national importance like India cricket can only be carried on public broadcaster Doordarshan’s terrestrial and free DTH platform Free Dish.

A Supreme Court order dated 22 August 2017 bars the private DTH and cable platforms from showcasing DD National channel when it is airing a sporting event of national importance.

However, the new MIB proposal, if it goes through, will see private distribution platforms being able to carry DD even when events of national importance like India cricket is taking place.

Media Partners Asia senior analyst Srivathsan AR said that the proposal would give private distribution platforms greater leverage in negotiations with sports broadcasters. He estimates that the sports broadcasters will take a 10-15% hit on subscription revenue.

Srivathsan noted that broadcasters in India have been adapting to a tough regulatory climate in India over the last couple of years with regards to distribution of content.

“With the proposed amendment to Sports Broadcasting Signals Act, Star India, which owns majority of key India-based Cricket covered in the act for the next 5 years, will be challenged to gain additional value from DTH and cable operators during contract renewals. We estimate a 10-15% negative impact on the quantum of distribution revenues the broadcaster would have made on status quo,” he stated.

He also said that the proposal will force Star to rationalise it acquisition budget. The broadcaster has committed a whopping $4 billion in acquiring big-ticket sports properties like India cricket, International Cricket Council (ICC), and Indian Premier League (IPL) rights.

Srivathsan also expects the value of non-Cricket rights to moderate if private sports broadcasters are forced to share feeds with DD even on private distribution platforms.

“Having committed a spend of more than US$4 billion on sports over the next 5 years, Star will be forced to rationalise spends to accommodate this impact. Media rights valuations for non-cricket properties will moderate as a result and it might start a vicious cycle of lower investments aimed at growth of non-cricket sports in India,” he said.

He also said that the sports broadcasters will be hoping that the growth of digitally distributed sports content (on OTT) will continue to spur industry growth and their strategic focus will be on accentuating reach and monetisation via this medium.

An industry source questioned that if the proposed amendment goes through then where will Indian cricket get its thousands of crores of rupees in terms of revenue from?

“That is the larger question to be considered. Indian cricket is running well because of the thousands of crores that Star is investing. If the act is amended in a way where sports broadcasters cannot make money then they will not invest. Who is the consumer who will benefit from the act being amended? Cable homes are not complaining about having to pay to get sports channels. Homes are not saying that they want to watch DD instead of Star and Sony,” the source said.

The source further wondered who the government is trying to benefit by bringing in these reckless changes. “Who is the government trying to help? DD Sports does not invest a single rupee in sports rights. It wants things for free. That is the basic issue. Amending an act so that DD Sports which has not taken off can make more ad monies is not the right way to go about things.”

The source noted that some amount of content exclusivity needs to be there for sports broadcasting to be financially viable. “If content exclusivity goes for a toss then the business does not make sense.”

MPA VP India Mihir Shah noted that the amendment will adversely impact the return on investments of sports broadcasters which have committed to invest $4 billion across marquee sports properties.

“For private distribution platforms, availability of an alternative sports feeds increases their bargaining power at the time of content renegotiation, though the platforms face the risk of some subscribers downgrading to low priced FTA packs (Rs99 pack). Lack of content exclusivity will dent the media rights value for sports which in turn funds its grassroots development,” Shah said.

Offering a media buyer’s perspective Havas Media CEO India, South Asia Anita Nayyar noted that the proposed amendment is a move on the part of the government to bring DD back into the reckoning. After all with the growth of cable and satellite DD took a backseat in the scheme of things.

She noted that the amendment will give advertisers another channel. It could be a situation where clients prefer DD on account of its reach both urban and rural. However she also noted that the quality of reception will play a big role in DD’s viewership and the advertiser’s choice. Right now for instance many viewers might enjoy watching Star Sports HD.